The United Spirits share price is in focus after the brokerage houses raised concerns about recent headwinds from Maharashtra and Andhra Pradesh. The share price has corrected by close to 10% in the last 1 year. However, the concern is whether the worst is over yet. Key brokerages like Nuvama Institutional Equities cut the target price as a result of the adverse policy changes in Maharashtra. However, Nomura recently initiated coverage on the stock with a Buy recommendation. A look at what’s next for the share price.
Nuvama on United Spirits
Nuvama slashed the target price on United Spirits to Rs 1,660 from Rs 1,795, while maintaining its ‘Buy’ rating on the stock. The price target implied an upside of 25.3%. This cautious revision comes on the back of weak overall volumes, which dipped 3.2% YoY. This slowdown was primarily triggered by adverse policy changes in Maharashtra and the ‘lapping’ effect of last year’s one-time retail pipeline filling in Andhra Pradesh.
The company’s management said that it remained cautiously optimistic, with Maharashtra remaining the key overhang. The broker further said that margins shall remain stable despite bulk Scotch inflation. This could be supported by sustained premiumisation and a healthy price/mix trajectory. United Spirits’ long-term guidance is maintained at 4–5% volumes and 6–8% price/mix.
“We reckon near-term weak volumes for United Spirits due to the full-quarter impact of Maharashtra-Made-Liquor (priced 25% below established IMFL players) and a likely one-quarter delay (now Q2 FY27) as the UK Parliament is yet to ratify the FTA,” said Nuvama.
United Spirits posted net sales and EBITDA growth of 7% and 5% YoY, respectively, in Q3FY26. Prestige & Above (P&A) volumes slipped (down 2% YoY) for the first time in five quarters. P&A (excluding Andhra and Maharashtra) volumes and value rose 6% and 14% YoY, respectively.
“P&A’s price/mix at 10.2% was driven by Maharashtra’s low-end volume decrease and premium mix, not pricing; sustainable range remains 6–8% with a near-term bias towards the upper end,” said Nuvama.
Nomura on United Spirits
Post the quarterly results, Nomura retained its ‘Buy’ rating on the stock with a target price of Rs 1,650, an upside of more than 25%. “We value core United Spirits at 50x P/E on March 2028 EPS, at a 10% discount to its five-year average P/E to factor in the recent headwinds from Maharashtra, and value Royal Challengers Sports at Rs 150 per equity share,” said Nomura.
While the premium (P&A) segment reported volume and sales growth declined in Q3, it grew 6% YoY excluding Andhra Pradesh and 14% YoY in Maharashtra, indicating strong momentum.
Higher-than-expected realisation growth of 10% in P&A (against the guidance of 6-8%) was largely driven by top and luxury brands reporting robust growth in the festive quarter and better mix due to Maharashtra impact, said the brokerage house.
However, Nomura takes a different stance on the rising Scotch inflation. The brokerage said that its potential impact in the coming quarters will likely be nullified by the benefits from the India-UK FTA, which United Spirits’ management expects to commence from Q2 FY27, thus keeping GPMs at current high levels.
The launch of MML by other brands at attractive prices is a competitive challenge for United Spirits’ popular and Lower-Prestige portfolio. However, it is doubling down on McDowell’s and Royal Challenge to remain competitive through its on-ground activations and launch of pocket packs.
United Spirits stock performance
United Spirits’ stock price has moved a little in the past five trading sessions. The share price of United Spirits has fallen 6.3% in the past one month and has changed a little over the past six months. The stock price has corrected by almost 10% over the previous one year.
United Spirits Q3FY26
The company posted a consolidated net profit of Rs 418 crore in the third quarter of the current financial year, an increase of 25% YoY compared to Rs 335 crore reported in the same quarter of the previous financial year. However, the net profit fell 10% sequentially compared to Rs 464 crore in Q2FY26.
The company’s revenue from operations came in at Rs 7,942 crore in Q3FY26, representing a growth of nearly 3% YoY from Rs 7,732 crore reported in the same quarter a year ago. The revenue includes an excise duty of Rs 4,248 crore. The revenue increased 10% QoQ, against Rs 7,199 crore in Q2FY26.
Conclusion
Overall, in the near-term, the company has been experiencing volume pressure in key markets; the growth in the premium segment and steady profitability suggest the company’s long-term growth story may remain in place. Also, the US-India FTA could be a catalyst for potential recovery.